Dr.K.Sridhara, CHENNAI V. AIT, CHENNAI

ITA 1388/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4581 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 19-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI MOHAN
• Assessee Lawyers: T BANUSEKAR
• Keywords: Tangible material; Reassessment proceedings
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 1388/MDS/2016 / ASSESSMENT YEAR : 2005-2006. DR. K. SRIDHARA, FLAT NO.1, BHARANI LOKESH SHRISHA, Z- BLOCK, NEW NO.24, 11 TH STREET, ANNA NAGAR, CHENNAI 600 040. [PAN AABPS 1905R] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, SALARY CIRCLE VI, CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. T. BANUSEKAR, C.A. /RESPONDENT BY : SHRI. M. MURALI MOHAN, JCIT /DATE OF HEARING : 27-04-2017 !' /DATE OF PRONOUNCEMENT : 03-05-2017 % / O R D E R ASSESSEE IN THIS APPEAL, DIRECTED AGAINST AN ORDE R DATED 04.02.2016 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-15, CHENNAI HAS RAISED ALTOGETHER ELEVEN GROUNDS OF WHICH GROUN D 2 TO 5 CHALLENGES THE REOPENING DONE FOR THE IMPUGNED ASSE SSMENT YEAR. ITA NO.1388/MDS/2016 :- 2 -: APPEAL HAS BEEN FILED WITH A DELAY OF ONE DAY. COND ONATION HAS BEEN FILED. DELAY IS CONDONED AND APPEAL ADMITTED. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORI GINAL ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COM PLETED U/S.143(1) OF THE ACT. AS PER LD. AUTHORISED REPR ESENTATIVE, ASSESSEE WAS A SALARIED EMPLOYEE AND HAD CLAIMED C81,561/- A S INTEREST PAYABLE ON A HOUSING LOAN FOR A SELF-OCCUPIED PROPE RTY WITH ADDRESS FLAT NO.1, BHARANI LOKESH SHRISHA, Z- BLOCK, NEW NO .24, 11 TH STREET, ANNA NAGAR WEST, CHENNAI. SUBMISSION OF THE LD. AUT HORISED REPRESENTATIVE WAS THAT, LD. ASSESSING OFFICER HAD ISSUED A NOTICE U/S. 148 OF THE ACT FOR REOPENING THE ASSESSMENT ON 29.0 3.2012. AS PER LD. AUTHORISED REPRESENTATIVE, ASSESSEE VIDE HIS LETTER FILED 24.04.2012 REQUESTED FOR THE REASONS FOR REOPENING. THESE REA SONS, ACCORDING TO HIM, WERE SUPPLIED AFTER SIX MONTHS ON 18.01.2013, FOR WHICH ASSESSEE FILED OBJECTIONS ON 07.03.2013. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE OBJECTIONS WERE DISPOSE D OF BY THE LD. ASSESSING OFFICER, ONLY IN HIS RE-ASSESSMENT ORDER DATED 28.03.2013, AND BY VIRTUE OF THE JUDGMENT OF HONBLE GUJARAT HI GH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD VS. DCIT 354 ITR 244 , ASSESSING OFFICER HAVING NOT PASSED A SPEAKING ORDE R DISPOSING OF THE OBJECTIONS, PRIOR TO THE ASSESSMENT, THE WHOLE PROC EEDINGS STOOD VITIATED. FURTHER, ACCORDING TO HIM REASON FOR REO PENING WAS STATED TO ITA NO.1388/MDS/2016 :- 3 -: BE ASSESSEES CLAIM FOR ENTIRE HOUSING LOAN INTERES T. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IN THE REASON GIVEN F OR REOPENING, ASSESSING OFFICER INDICATED ESCAPEMENT OF INCOME AS 50% OF THE INTEREST CLAIM SINCE LOAN WAS TAKEN IN JOINT NAMES. HOWEVER, AS PER LD. AUTHORISED REPRESENTATIVE WHEN THE ASSESSMENT WAS C OMPLETED THE INTEREST WAS DENIED IN-TOTO NOT FOR THIS REASON BU T FOR A REASON THAT ASSESSEE OCCUPIED THE PROPERTY FOR RESIDENTIAL PURP OSE ONLY IN MARCH 2005. CONTENTION OF LD. AUTHORISED REPRESENTATIVE W AS THAT ADDITION MADE BEING NOT RELATED TO THE REASON GIVEN FOR REO PENING THE ASSESSMENT, BY VIRTUE OF JUDGMENT OF HONBLE RAJAST HAN HIGH COURT IN THE CASE OF CIT VS. SHRI RAM SINGH, 306 ITR 343, BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD 331 ITR 236 AND THAT OF DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD VS. CIT 336 ITR 136 THE REASSESSMENT FAILED. IN ANY CASE, AS PER THE LD. AUTHORISED REPRESENTATIVE THE REOPENING HAVING BEEN DONE AFTER FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR AND THE ESCAPEMENT OF INCOME BEING LESS THAN C1,00,000/-, N OTICE ISSUED U/S.148 OF THE ACT WAS INVALID. 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT OBJECTIONS TO THE REASONS WERE DEALT WITH IN THE AS SESSMENT ORDER. FURTHER, ACCORDING TO HIM DISALLOWANCE MADE WAS THA T OF THE SAME AMOUNT REFERRED TO IN THE REASONS. AS PER LD. DEPA RTMENTAL ITA NO.1388/MDS/2016 :- 4 -: REPRESENTATIVE , ORIGINAL ASSESSMENT WAS ONLY A PRO CESSING UNDER SECTION 143(1) OF THE ACT AND BY VIRTUE OF THE JUDG MENT OF HONBLE APEX COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD, 291 ITR 500, THE REOPENING WAS VALID. 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS. HOUSING LOAN INTEREST CLAIMED BY THE ASSESS EE AGAINST THE SELF OCCUPIED PROPERTY WAS C1,15,647/- AND PER PAPER BOO K PAGE 4 WHICH GIVES THE COMPUTATION OF INCOME FILED. NOTICE FOR REOPENING WAS DATED 29.03.2012. REASONS FOR THE REOPENING GIVEN BY THE LD. ASSESSING OFFICER IN HIS LETTER DATED 18.01.2013 IS REPRODUCE D HEREUNDER:- PAN AABPS 1905R DATED: 18.01.2013 TO DR.K.SRIDHARA FLAT NO.1, BHARANL LOKESH SHRISHA 2 ND BLOCK, NEW. NO. 24, 11TH STREET ANNA NAGAR CHENNAI - 600 040. SIR / MADAM, SUB: INCOME T AX ASSESSMENT - YOUR OWN FOR THE A. Y. 2005-06 - REG. REF: NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 DATED 29-03-2012 WHILE PROCESSING THE RETURN OF INCOME, THE ENTIRE HOUSING LOAN INTEREST WAS ALLOWED WHICH SHOULD BE RESTRICTED TO 50% AS THE LOAN WAS TAKEN IN JOINT NAMES. SINCE THIS IS A TIME BARRING ASSESSMENT, YOU ARE REQUESTED TO FURNISH YOUR REPLY ON OR BEFOR E 01.02.2013. YOURS FAITHFULLY, (N. MADHAVAN) DEPUTY COMMISSIONER OF INCOME TAX SALARY CIRCLE VI(I/C), CHENNAI. ITA NO.1388/MDS/2016 :- 5 -: FIFTY PERCENT OF THE AMOUNT COMES TO C57,824/- ONLY . SECTION 149(1) OF THE ACT IS REPRODUCED HEREUNDER:- (1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED F OR THE RELEVANT ASSESSMENT YEAR,- (A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B) OR CLAUSE (C); (B) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR. (C) IF FOUR YEARS, BUT NOT MORE THAN SIXTEEN YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT . IT IS CLEAR THAT ONCE FOUR YEARS HAVE GONE BY, A R EOPENING NOTICE CAN BE SENT ONLY IF INCOME WHICH HAS ESCAPED ASSESSMENT IS MORE OR LIKELY TO BE MORE THAN C1,00,000/-. THAT APART, ASSESSEES OBJECTION TO THE REASONS GIVEN FOR RE-OPENING WERE NEVER DISPOSED OF BY LD. ASSESSING OFFICER, PRIOR TO COMPLETING THE ASSESSMENT. HE HAD DEALT WITH THIS ONLY IN HIS ASSESSMENT ORDER. WHAT WAS HELD BY HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD (SUPRA ) AT PARA 23 OF THE JUDGMENT IS VERY RELEVANT AND THIS IS REPRODUCED HE REUNDER:- ITA NO.1388/MDS/2016 :- 6 -: 23. FROM THE AFORESAID DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA IS MAINTAINABLE WHERE NO ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER DECIDING THE OBJECTION FILED BY THE ASSESSEE UNDER SECTION 148 OF THE ACT AND ASSESSMENT ORDER HAS BEE N PASSED OR THE ORDER DECIDING AN OBJECTION UNDER SECTION 148 OF THE ACT HAS NOT BEEN COMMUNICATED TO THE ASSESSEE AND ASSESSMENT ORDER HAS BEEN PASSED OR THE OBJECTION FILED UNDER SECTION 148 HAS BEEN DECIDED ALONG WITH THE ASSESSMENT ORDER. IF THE OBJECTION UNDER SECTION 148 HAS BEEN REJECTED WITHO UT THERE BEING ANY TANGIBLE MATERIAL AVAILABLE WITH TH E ASSESSING OFFICER TO FORM AN OPINION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND IN ABSENCE OF REASONS HAVING DIRECT LINK WITH THE FORMATION OF THE BELIEF, THE WRIT COURT UNDER ARTIC LE 226 CAN QUASH THE NOTICE ISSUED UNDER SECTION 148 O F THE ACT. THE WRIT PETITION FILED BY THE PETITIONER IS MAINTAINABLE. THE ASSESSING OFFICER IS MANDATED TO DECIDE THE OBJECTION TO THE NOTICE UNDER SECTION 14 8 AND SUPPLY OR COMMUNICATE IT TO THE ASSESSEE. THE ASSESSEE GETS AN OPPORTUNITY TO CHALLENGE THE ORDER IN A WRIT PETITION. THEREAFTER, THE ASSESSING OFFICER MAY PASS THE REASSESSMENT ORDER. WE HOLD THAT IT WAS NO T OPEN TO THE ASSESSING OFFICER TO DECIDE THE OBJECTI ON TO NOTICE UNDER SECTION 148 BY A COMPOSITE ASSESSMENT ORDER. THE ASSESSING OFFICER WAS REQUIRE D TO, FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILE D UNDER SECTION 148 AND SERVE A COPY OF THE ORDER ON ASSESSEE. AND AFTER GIVING SOME REASONABLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DONE BY THE ASSESSING OFFICER, THEREFORE, THE ORDER ON T HE OBJECTION TO THE NOTICE UNDER SECTION 148 AND THE ASSESSMENT ORDER PASSED UNDER THE ACT DESERVES TO B E QUASHED. THE JUDGMENT OF HONBLE APEX IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD, (SUPRA ) IS OF LITTLE HELP TO THE REVENUE WHEN REOPENING IS TIME BARRED AND OBJECTION TO REASONS GIVEN FOR R EOPENING WERE NOT DEALT PRIOR TO COMPLETION OF THE ASSESSMENT. I HAV E NO HESITATION TO ITA NO.1388/MDS/2016 :- 7 -: HOLD THE REASSESSMENT PROCEEDINGS AS WELL THE REAS SESSMENT AS INVALID AND BAD IN THE EYES OF LAW. IT STANDS SET ASIDE. 5. SINCE ASSESSEE SUCCEEDS ON THE QUESTION OF JURISDIC TION OTHER GROUNDS ARE NOT ADJUDICATED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 3RD DAY OF MAY, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:3RD MAY, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF